Airlines pay no tax on aircraft fuel
Motorists pay 58p a litre in fuel duty + VAT at 20%. Thus petrol tax is at a rate of approx 160% of the cost of the fuel itself. Tax on aviation fuel is 0%.
Airlines pay no VAT
- There is no VAT on airline tickets.
- There is no VAT on the purchase of aircraft.
But motorists pay VAT at 20% on the purchase of cars.
- There is no VAT on the servicing of aircraft.
But motorists pay VAT at 20% on the servicing of their cars.
- There is no VAT on goods sold in airport duty-free shops or on meals
served on aircraft.
But motorists pay VAT on most goods and meals in motorway cafés.
Airports pay no tax on alcohol and tobacco
No tax is paid on drink and tobacco sold in airport duty-free shops. Tax on a 70cl bottle of whisky in the High Street is £7.04. Tax on cigarettes in the local shop is about 80%.
Aviation is only taxed via passengers through air passenger duty (APD)
Airlines and airports do not pay APD, only passengers pay.
The total revenue from air passenger duty was £2.2 billion in 2010-11. In 2011-12, it was about £2.6 billion. It is forecast at £2.8 billion for 2012-13.
The Treasury estimated in October 2009 that the loss of revenue as a result of no fuel tax and no VAT on airlines was at least £10 billion a year. These calculations have since been confirmed, and the figure is between £10 and 11 billion.
So each year, the effective annual subsidy to the aviation industry, from paying less tax than motoring, is around £8 - 9 billion.
To achieve fair tax with motorists, air passenger duty would need to be quadrupled!
The rate of APD is only £13 per passenger, for a return flight, for anywhere in Europe. The rates are considerably more for longer journeys, reflecting the extra cost and the extra distance being travelled.
Further details and figures available on the AirportWatch site.